How to Compute VAT in the Philippines (2025 Guide)
Value Added Tax (VAT) is a consumption tax imposed on the sale of goods and services in the Philippines. As of 2025, the standard VAT rate is 12%. Understanding how to compute VAT is essential for businesses, freelancers, accountants, and even consumers. In this guide, we will walk you through how VAT works, how to compute it from receipts, and answer the most searched questions about VAT in the Philippines.
What is VAT?
VAT is a tax imposed on the value added to goods and services at each stage of production or distribution. In the Philippines, businesses registered for VAT must add 12% VAT to the gross selling price of taxable goods or services and remit this to the Bureau of Internal Revenue (BIR).
Standard VAT Rate in the Philippines
- Standard VAT Rate: 12%
- Zero-Rated VAT: 0% (e.g., export sales)
- VAT Exempt: Certain services such as educational and medical services
Formula for Computing 12% VAT in a Receipt
There are two common scenarios:
1. VAT Inclusive
If the amount is VAT inclusive (already includes 12%), you can extract the VAT using:
Example: ₱1,120 (VAT inclusive)
VAT = ₱1,120 / 1.12 × 0.12 = ₱120
2. VAT Exclusive
If the amount is before VAT is added:
Example: ₱1,000 (before VAT)
VAT = ₱1,000 × 0.12 = ₱120
Total = ₱1,120
How to Compute 12% VAT in Receipt
This is one of the most searched VAT queries. To compute 12% VAT in receipts:
- Identify if the total is VAT-inclusive or exclusive
- If VAT-inclusive: divide the amount by 1.12 and multiply by 0.12
- If VAT-exclusive: multiply the base by 0.12 to get the VAT
How to Compute VAT in Receipt (Philippines)
When you receive a receipt with a total of ₱2,240, and it’s VAT inclusive:
Net Amount = ₱2,000
Philippine receipts often show the breakdown. If not, you can do the math using the formula above.
How to Compute 12 Percent VAT Philippines
This means adding 12% to a net amount:
Example: ₱3,000 × 1.12 = ₱3,360
Amount Net of VAT Philippines
To extract the VAT-exclusive price from a VAT-inclusive total:
Example: ₱5,600 / 1.12 = ₱5,000
What is 1.12 in VAT in Philippines?
“1.12” is a multiplier used to compute the total VAT-inclusive price from a base price. It means the original price plus 12% VAT.
₱1,000 × 1.12 = ₱1,120
How to Compute VAT Payable to BIR
- Output VAT: VAT collected from customers (sales)
- Input VAT: VAT paid on business purchases
Example: Output VAT = ₱10,000, Input VAT = ₱7,000
VAT Payable = ₱3,000
VAT Filing in the Philippines
- Monthly VAT Declarations: BIR Form 2550M
- Quarterly VAT Returns: BIR Form 2550Q
- Filing deadline: 20th of the following month
VAT Registration Threshold
Businesses with annual gross sales exceeding ₱3 million are required to register as VAT taxpayers.
Tips for Accurate VAT Computation
- Know if your prices are VAT-inclusive or exclusive
- Use the correct formula to extract or add VAT
- Keep detailed receipts and official invoices
- Use a calculator or spreadsheet to avoid errors
Free VAT Calculators
Want to save time? Use an online tool like the General VAT Calculator or try the VAT Calculator Philippines for country-specific calculations.
Summary Table
| Scenario | Formula | Example |
|---|---|---|
| From VAT-exclusive amount | Base × 0.12 | ₱1,000 × 0.12 = ₱120 VAT |
| From VAT-inclusive amount | Total / 1.12 × 0.12 | ₱1,120 / 1.12 × 0.12 = ₱120 VAT |
| Total price with VAT | Base × 1.12 | ₱1,000 × 1.12 = ₱1,120 |
Conclusion
Computing VAT in the Philippines is simple once you understand if the price is VAT-inclusive or not. The standard 12% VAT applies in most scenarios, and you can use formulas or tools like the VAT Calculator Philippines to speed up the process. Whether you’re issuing receipts, preparing BIR forms, or making purchase decisions, knowing how to compute VAT helps ensure transparency and compliance.